A Matter of Magnitude - Unicef

UNICEF ROSA / Publication June 2009

1 South Asia comprises Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka

A Ma
er of Magnitude The Impact of the Economic Crisis on Women and Children in South Asia The eight countries in South Asia1 have been shaken by the shocks and turbulence in commodity and financial markets over the last two years. These changes have inflicted new and drama
c stress on vast swathes of the popula
on in a region where more than 1.18 billion people, or three quarters of the popula
on, in eight countries subsist on less than $2 a day (World Bank). Without urgent, inclusive government response, the poor of South Asia – nearly 20% of the world's popula
on – will sink further into poverty and malnutri
on, with long-term nega
ve consequences for growth and development in the region and globally.

“It hurts my heart that we cannot provide the things my children need. To earn enough money to feed the family for one day we have to work for two days. We have sold two of our bulls and most of my rings and necklaces. The only assets we have le
are this house and three small bulls but we cannot get them good fodder” Nawa Dumchi Bikar, Mugu District, Nepal (April 2009)

High levels of income inequality, rapid urbaniza
on, persistent and pervasive social polariza
on, increasing food prices, a lack of government aen
on to agriculture and rural development, and the moun
ng effects of climate change - droughts, floods and cyclones - are just some of the reasons why more than 1 in 5 of South Asia’s popula
on was exposed to hunger and malnutri
on, even before the food, fuel and financial crises struck in 2008. The hardship has fallen most heavily upon women and children, people living in poverty, and the socially marginalized.

Photo: Marta Ramoneda/UNICEF/ROSA/Pakistan/2009

This ‘silent crisis’ of hunger and malnutri
on, already a fact of life for millions of South Asians, has been forced into sharper focus by the food and fuel price shocks of 2008. In fact, the situa
on is worsening as the mul
ple impacts of the crises begin to take root. As a result, the IMF and World Bank have highlighted a “development emergency”, poin
ng to the serious and long-las
ng consequences for the poor and the lives, welfare and prospects of the most vulnerable, especially the region’s children.

A woman collects bread for her family in Karachi - about 51 percent of Pakistanis do not have enough food due to price hikes 1

Understanding and tracking the effects of this complex interplay of global, evolving trends and their impact on poor and excluded communi
es in South Asia will be crucial to determine the policies and strategies required of governments and all partners. These policies must help cushion the blows and, at a minimum, ensure that the most basic needs of the most vulnerable are met in the present, while taking steps to protect their well-being and security into the future.

A Ma
er of Fact In the space of two years, the number of people suffering from chronic hunger in South Asia has increased by about 100 million. Hunger in South Asia was already at vastly unacceptable levels at 300 million before the start of the crises and is now es
mated to be more than 400 million by the close of 2008. An increase of about 100 million represents the highest levels of hunger recorded in forty years. By comparison, globally, there are an es
mated one billion people who are hungry, and 2.6 billion who are poor.

Table 1: The Growing Number of Hungry in South Asia (in millions)

Recent survey results from Bangladesh (FAO, February 2009), Nepal (WFP, February 2009) and Pakistan (Inter-Agency mission, July 2008) suggest that the crisis is festering: •

In Nepal, the total number of people at risk to hunger rose by 50 percent (from 6 million to over 9 million people) in just 6 months last year;

•

In Pakistan, the es
mated number of hungry people rose by 16 percent from 72 million to 84 million over a period of a year and a half ; and,

•

In Bangladesh the 2007/2008 es
mated number of food insecure people was 65.3 million, an increase of 7.5 million, or 13 percent from the previous year.

Given the scale of the economic slowdown, coupled with price increases for many staple foods, there is no evidence to suggest that other countries in the region have fared any beer. 2

Figure 1 below relates the latest hunger es
mates (as a percent of popula
on consuming less than the minimum country specific threshold), to the World Bank `poverty’ lines ($1.25/person/day and $2/person/day). The graph demonstrates that even if ‘hunger’ is difficult to measure, the scale of the problem in South Asia is very large: 33 percent of South Asians eat less than the minimum recommended daily requirements, and 74 percent live in households earning less than $2/day. These households typically spend 60-70% of their total expenditure on food and are therefore extremely vulnerable when food prices rise. In countries with persistent and high infla
on, such as Pakistan and Sri Lanka, almost all those earning less than $2/day face inadequate access to food, as their household budgets are stressed beyond their means. In many South Asian countries, per capita calorie consump
on has remained stagnant or fallen over the last fieen years, despite rising per capita incomes. Thus, the challenge of hunger and malnutri
on in South Asia is both a problem of ‘access to food’ and also the ‘adequacy of food and feeding prac
ces’, par
cularly for young children.

Figure : Measures of Depriva
on in South Asia

With such vast numbers already in poverty, the combined effects of the food, fuel and financial crises are clearly intensifying malnutri
on and hunger, worsening poverty and eroding the social fabric that binds families and communi
es together. These effects also violate the rights of every child to food, educa
on, good health and protec
on. At the same
me, the crises threaten to overturn the progress that countries have made towards reducing poverty and achieving the Millennium Development Goals. The poten
al loss of capacity and produc
vity amongst a genera
on of children and young adults in the near future, due to stunted intellectual and physical growth, should be of major concern to countries dependent on an able energe
c and young popula
on to fuel economic growth and future prosperity. Moreover, governments are morally compelled to ensure that children, the most vulnerable members of society, do not bear the burden of the crises they did not create. 3

er of Scale

Photo: Brian Sokol/UNICEF/ROSA/Bihar/2009

mately on on. Almost half the world’s poor currently live in South Asia. And many, if not most of these people, were hungry and malnourished even before the food, fuel and financial crises began in 2008.

A Malnourished child in Bihar, India where 56 percent of under fives are underweight

Children under the age of 18 make up 41 percent of the South on - 615 million persons. Of the 175 million children under 5 years who live in the region, 45 percent are malnourished on in the world, eclipsing even sub-Saharan Africa. Despite the fact that countries in South Asia have much higher GDP growth rates, there are more than twice as many underweight children in South Asia than in Africa. Indeed, by any measure, the numbers of children malnourished -- wasted and stunted -- in South Asia are far higher than anywhere else on earth. Yet these numbers do not reveal the full magnitude of the problem. They do not reflect the lack of shelter, water and es that affect millions of children in South Asia.

Some effects of the global recession on economies in South Asia •

India’s exports plunged by 15 percent in October 2008 and by 19% in Feb 2009, as a direct result of the global economic crisis (UNDP 2009). Labour-intensive sectors such as the garment industry, leather, gems and jewellery were the worst affected.

•

The Pakistan economy is extremely fragile and among the most vulnerable in the region due ng foreign exchange to high fiscal and current account deficits, runaway infl reserves, a weak currency and considerable internal security issues. Pakistan has been forced to ask for financial assistance to cover short-term debt and stabilize its economy. In November 2008, the IMF approved a $7.6 billion loan package for Pakistan. ons in the region face similar problems: Sri Lanka and Maldives, being food and fuel importers, found themselves exposed to sharp increases in their import bills. Tourism, an important source of revenue has suffered in both countries.

•

Bangladesh was forced to import 300 percent more rice in 2007 (FAO/WFP data) due to me, its export cyclones and fl sector, especially garments, could be affected due to weak global demand in 2009.

•

Nepal, emerging from a decade of conflict and low growth, imports a large share of its goods and services through India, including fuel and food. However, in Nepal, as in Bangladesh, strong fl ances from abroad propped falling current account balances in their ve countries during 2008; this effect appears to be waning in mid-2009. Tourism may ng incomes in tourist origin countries. on of the Tala Hydroelectric nued to enjoy a current account surplus. Its growth cycle is very closely linked onal crisis, although the tourism sector could be under threat as global tourism demand drops.

4

Photo: Brian Sokol/UNICEF/ROSA/Nepal/2009

Nepalese children in Mugu district, watch storm clouds gather over the Himalayas. Food prices here are up by 40 Percent since last year.

UNICEF data indicate that 300 million children, 54 percent of the region’s children, are es
mated to live in condi
ons of child poverty (defined as being deprived of two or more basic needs – such as food, health services, educa
on, and shelter). Nearly 8 in 10 children live without secured access to one of the basic social services. More than 6 in 10 children, almost 345 million in total, are at risk of sickness and disease due to the lack or absence of proper sanita
on (UNICEF ROSA, Regional Study on Child Poverty and Dispari
es, forthcoming). Women and children under 5 are most at risk because they do not have the assets or resources to cope with shocks. This is par
cularly the case in Afghanistan, Nepal and Pakistan where young children under 18 make up an even greater share of the popula
on than in other South Asian countries. Excluded or ethnic minori
es are also adversely affected because they have limited and oen unreliable access assets, to basic social services, and to social protec
on. Once born into poverty, children are more likely to remain poor as adults, trapped in an unrelen
ng cycle because the effect of poor nutri
on and exclusion from educa
on, health, clean water and sanita
on stymies their poten
al for life. Moreover, their lost produc
ve poten
al is large and poten
ally irreversible. Providing food and nutri
on security as well as jobs to South Asia’s youth, both today and in the future, are therefore entwined policy priori
es.

5

A Ma
er of Urgency The economic crisis is likely to have an even greater impact, if urgent ac
on is not taken. Every country in South Asia has been affected by the economic crises through slowdown in global demand, surging domes
c infla
on, especially of food items, contrac
on of fiscal space, structural changes in the labor markets and vola
le capital flows. The IMF has accordingly revised GDP growth es
mates downwards for all countries in South Asia to an average of 3.9 percent in 2009 and less than 5 percent for 2010. As a comparison, between 2005-2007 GDP growth rates nearly reached 10 percent for the region. Although South Asian economies are s
ll expected to grow faster than other advanced economies that are already experiencing recession, the fallout will be significant, with low-income food and energy deficit countries of the region most at risk. When even the high growth rates of the mid-2000s did not generate adequate employment, the projected reduced GDP growth rates and defla
on due to the crises cannot maintain exis
ng formal sector employment, let alone absorb the large numbers of youth who come into the labor market each year. Pressure on the informal sector will intensify – where an es
mated 90 percent of the South Asian labor force ekes out a living. This pressure will hollow-out wages pushing larger numbers of the working poor further below the poverty line. With slower GDP growth ahead, governments in the region may resort to reducing the real value of transfers to households at a
me when new measures are urgently needed to assure income par
cularly to those in insecure employment. South Asia’s labour markets are currently contrac
ng as overseas trade slows, affec
ng large sec
ons of the workforce, both in the formal and informal or unorganized sector. For example: in India, the diamond industry has laid off some 200,000 diamond polishers in Surat since October 2008 due to falling demand for luxury items from overseas2. This sector employs almost 1 million workers, many of whom are migrants. India’s labour intensive coon tex
les and leather sectors are also vulnerable and job losses in the IT and automobile sectors are moun
ng. In January 2009, a survey conducted by the Indian Central Employment Ministry es
mated that the total job losses since October 2008 came to over half a million. The garment industry in Bangladesh, Sri Lanka and Nepal are also under threat from falling demand in the markets of the North and increased compe

on.

“I was so embarrassed [that] I had no savings. My children expected me to give them at least one gi
when I came back from Malaysia,” he said. ‘ But I haven’t even bought a single piece of new clothing for anybody in the family and I had to take my daughter out of school. “ Mo Khan, Gazipur district, Bangladesh (March 2009)

2

Source: Indian Express Report on Survey conducted by Ministry of Industry, Trade and Labor, India. April 2009. hp://www.indianexpress.com/news/since-diwali-two-lakh-jobs-lost-in-surat-di/423659/

6

Remiances from migrant work overseas, a tradi
onal source of income for many South Asian households, are under threat from global contrac
on. The World Bank es
mates that globally remiances are expected to drop to $290 billion in 2009, from last year’s high of $305 billion. Foreign remiances con
nue to outstrip capital flows and official development aid in many countries and have remained rela
vely “resilient” for the
me being; but increasingly, low skilled migrant workers from South Asia are being laid off and sent home3.

A Ma
er of Survival An overwhelming majority of South Asian families have been affected by high infla
on and in par
cular, rising food costs. Those hit the hardest are on the margin and just below the poverty line – that is, the urban poor, rural landless, women and children, and other socially excluded ethnic and minority groups. Typically, these groups spend more than 60-70 percent of their income on food, have larger families, lack sufficient assets to cushion them from rising prices and have limited or no access to insurance and credit facili
es. Evidence from past crises shows that when faced with unemployment and lower wages, poor families eat cheaper and less nutri
ous food, leading to weight loss and malnutri
on, especially for young children and pregnant women. Fees for school, including the costs of textbooks, uniforms and transporta
on, become unaffordable for poorer families, forcing them to pull their children from class to join the workforce or support the household - seldom returning to school aerwards and effec
vely ending their chance of a formal educa
on.

•

Decreasing incomes affect the quality and quan
ty of food consumed especially for women who eat last in many South Asian households. According to FAO (2006), more than 60 percent of chronically hungry people globally are women.

•

Household spending on health and educa
on may be squeezed out with long-term consequences. For example, children are moved from fee-paying private schools to lower quality public schools, sent to work,

Photo: Shehzad Noorani/UNICEF/ROSA/Bangladesh/2009

A picture is now beginning to emerge of how the most vulnerable would try and survive this crisis. Many families have no real op
on except resor
ng to ineffec
ve short-term solu
ons with irreversible consequences, especially for children4. In the absence of sufficient, flexible assets or of social protec
on and safety nets, poor families have been forced to resort to a range of dras
c survival measures (FAO, Food Insecurity in Bangladesh, February 2009; UN Inter Agency Mission, Pakistan, July 2008, WFP Nepal, February 2009):

Health workers, Bau Bazaar slum in Dhaka, Bangladesh, distribute micro-nutrient sprinkle powders to mothers

3

In Nepal, for example, remiances are es
mated to represent 17% of GDP and there is a reported slowdown in migrant departures to Malaysia and the Gulf States. See Kathmandu Post 18 May 2009. 4 UNICEF/WFP/UN Interagency missions have made available recent field surveys and rapid assessments conducted in Afghanistan, Pakistan, Nepal, Bangladesh and India. UNICEF is currently concluding a food and nutri
on survey in Sri Lanka.

7

and in some cases pulled out of school altogether. In many South Asian countries, girls are removed from school before their brothers. (UN Inter Agency Mission Report: High Food Prices in Pakistan. July 2008). •

Reduced wages and job losses due to economic slow-down oen force families to send women and children to work outside the home to bring in extra income. While becoming a formal breadwinner can enhance the status of women within the household, it also means they may have less
me for childcare and ensuring children are ea
ng properly. In addi
on, when domes
c responsibili
es devolve to girl children, it is oen at the cost of their educa
on. Children sent to work lose out on educa
on and risk exposure to injury and other health risks on the job.

•

Domes
c and interna
onal migra
on of family members in search of beer job prospects can offer an escape route from poverty. However, migra
on may also place workers in low produc
vity jobs, with poor access to basic services, as well as in jobs with increased exposure to unforgiving and dangerous work condi
ons. In cases where key family members are absent, the disrup
on to tradi
onal family arrangements can have adverse consequences for children who may be le unaended or in the care of surrogate parents.

•

Already stretched to the limit, families tend to borrow money at high interest rates and selloff hard earned assets. As a consequence, they are le without resources and assets to buffer against further shocks and rising food prices.

•

Resources usually allocated to women and children for food and educa
on may change as families struggle to cope with new and unforeseen hardships. Educa
on and play
me may diminish as children are drawn into paid or unpaid work. More worrisome, the incidence of early marriage, trafficking, neglect and abuse may increase when families struggle to cope with less food, poorer health and cramped living condi
ons.

As a result of these short-term, oen necessary coping strategies, families find themselves worse off than before, with decreasing means to stop or reverse their descent into absolute poverty and to cope with future shocks and price fluctua
ons. Besides the nega
ve impact on child health and educa
on, such emergency coping strategies have serious macro implica
ons for economic growth. This is par
cularly striking at a
me when most South Asian countries have increasing numbers of their popula
on moving towards the working age.

A Ma
er of Economic Sense The global economic meltdown is now a full-fledged development challenge for South Asia. In response, governments in the region have taken bold and some
mes unconven
onal steps to s
mulate growth and shield their ci
zens from the calamitous effects of the combined crises. Thus, although the forecasts appear dire, there is cause for hope that governments will seize this opportunity to address both fiscal and social crises simultaneously. With the vision to employ progressive approaches, leaders across South Asia should use the present crisis as an opportunity to provide addi
onal, more inclusive and higher quality social services. Such support can help to address chronic hunger and malnutri
on, achieve beer and more equitable health and educa
on outcomes, forestall rising poverty and inequality, and at the same
me make

8

What UNICEF is Doing UNICEF is working with our UN, government and other partners to respond to these crises in a number of ways. •

Strengthening the evidence-base to inform decision-making on appropriate policy and programme interven
ons. This includes suppor
ng emergency food and nutri
on surveys, leading or joining vulnerability and impact assessment missions at sub-na
onal level, as well as bolstering systems to monitor school drop-out and incidence of child labour.

•

Enhancing policy and research ini
a
ves in areas such as child poverty and dispari
es, gender, social budge
ng, social protec
on, migra
on and legisla
ve reform. This approach involves working with local and interna
onal ins
tu
ons as well as na
onal partners to analyze trends and na
onal responses to the crises.

•

Demonstra
ng what works as well as suppor
ng and scaling-up na
onal programmes on nutri
on and associated health interven
ons. These programmes include reinforcing community-based management of acute malnutri
on, newborn and maternal health ini
a
ves and support to basic health services through childhood, youth and early adulthood for women.

•

Strengthening and improving access to water, sanita
on and hygiene and educa
on, with a par
cular focus on universal coverage to ensure access for the most vulnerable.

•

Strong advocacy at na
onal, regional and global levels for expanding social protec
on systems for the most vulnerable.

their economies more produc
ve and compe

ve for the future. It thus also makes economic sense to invest in the right to basic social services – they pay for themselves over
me. Moreover, it makes poli
cal sense: economic stability ul
mately depends on addressing poverty, inequity and discrimina
on, which are strongly linked to poli
cal instability. To leaders and policy makers struggling with a threat of diminishing fiscal resources, mobilizing resources for social investment may appear counter-intui
ve. However, taking a long-term, visionary approach is both possible and makes good economic, social and poli
cal sense. While the effects of crises may pass with
me, decisions taken today will affect the future of South Asia - whose popula
on is expected to increase by another 440 million within the next twenty years, crossing the 2 billion mark.

Government Acon: Food and Fuel Price Strategies While the economic and food price crises did not originate in South Asia, governments in the region have had to introduce various measures to address the slowdown in growth, investment, exports and

9

surging domes
c infla
on by providing ad hoc safety nets, subsidies on food and fuel, or comprehensive economic s
mulus packages. In early and mid 2008 federal governments across all countries of South Asia were forced to raise the market prices of petrol, diesel and kerosene, promp
ng strikes and protests in many parts of the region. The rising price of fuel affected the costs of transport, freight, fer
lizers and electricity and eventually basic food staples such as rice, wheat and cereals. Bangladesh and India succeeded in subsidizing rice prices, keeping them below the interna
onal levels. Overall, however, although interna
onal prices have now declined from their peak in 2008, food prices throughout South Asia are s
ll higher than in 2007. This also reflects systemic problems in the agricultural sector throughout most of South Asia countries, where produc
vity gains and reforms have lagged behind improvements in other sectors such as industry and services. This food price infla
on decreases the ability of families to buy food in sufficient quan
ty and quality, especially when 60-70 percent of a household’s budget is devoted to food expenditure (ADB, 2008, country specific household and income expenditure surveys). Comprehensive government strategies will therefore be required over a sustained period.

A Ma
er of Protecon Currently, all countries of the region employ a range of social protec
on instruments (UNICEF ROSA 2009). For instance, the South Asian governments offer their ci
zens some form of poverty-related cash transfers. Examples include the Sri Lankan Samurdhi programme, created in 1995, which provides food stamps for women, youth and disadvantaged groups, public works and youth employment opportuni
es, and credit schemes; Pakistan’s recent ini
a
ve – the Benazir Fund - aims to cover 5 million poor households and primarily addresses women, and has most recently been expanded to include newly displaced popula
ons. Many countries have school meal programmes, contribu
ng to basic food intake of school-age children and serving as an incen
ve to aend classes. Afghanistan, Bangladesh, India, Nepal, Pakistan, and Sri Lanka have well-established food-for-work and cash-for-work employment programmes. India introduced a large employment guarantee scheme (NREGA) for the rural poor in 2005 and this approach is being replicated in Bangladesh and Nepal. Bangladesh, India, Pakistan and Sri Lanka use systems of ra
on cards or price-controlled shops to address food price infla
on. Sri Lanka has adopted a na
onal nutri
on plan which includes access to nutri
ous food for low-income households. While all eight countries feature public sector old-age pensions, Nepal has a unique system of non-contributory old age pensions for all ci
zens over the age of 70, which reaches even remote areas of the country. But more needs to be done. Roughly 1.18 billion people living on less than $2/day in South Asia and the swelling numbers of children and adults living in condi
ons of extreme hunger and malnutri
on argue for more comprehensive forms of social protec
on.

10

SOUTH ASIA – COUNTRY PROFILES                 

AFGHANISTAN    Food & Nutrition Situation1    Recent estimates suggest that the total number of people with inadequate food  consumption rose from 6.5 million in 2007 to at least 7.8 million by July 2008. According  to the National Risk and Vulnerability assessment, 35 percent of Afghans are chronically  food insecure. Almost 1.3 million additional people became chronically food insecure in  2008.     Major causes for increased food insecurity include:  • Drought, war, high food prices and export bans from Pakistan and Kazakhstan;  the retail price of wheat (the main staple for more than 70 percent of  Afghanistan) is declining though higher than in 2007. Prices of improved seed  and fertilizers have doubled since 2007 which are discouraging their use and  jeopardizing 2009 crop prospects; fuel prices not declining fast enough;  government announced a 36 percent decline in domestic food production;  winter period imposes increased risks; civil insecurity and conflict in the South.  Among the highest child malnutrition rates in South Asia:  • Almost 55% of children suffer from malnutrition (stunting); 12 percent suffer  from acute malnutrition.2 More than 7 out of 10 children suffer from deficiencies  in micronutrients while almost 1 in 2 women suffer from iron deficiencies;  absolute number of children affected likely to be greater than 2.75 million;  under 5‐mortality rate rose from 230 per 1,000 in 2003 to an estimated 257 per  1,000 in 2007/08.  30 percent of poorest households spend more than 80 percent of income on food.  • Forced to decrease food consumption by over 10 percent due to price increases;  informal social networks teetering on the verge of collapse due to prolonged  conflict  Special vulnerable groups:  • Women headed households making up about 5 percent of urban households;  poor large households with 8‐9 members and only 1 casual labor income earner;  disabled heads of households; households deported from Iran and internally  displaced.    Economic situation3    • Afghanistan is one of the poorest countries in the world. Landlocked by 6  neighbors, years of conflict and climate shocks have taken a heavy toll.  1

Source: WFP Rapid Assessment June 2008, FEWS net Nov 2008 and March 2009 update. Source: WFP Rapid Assessment June 2008 & UNICEF SOWC 2009 3 Source: Da Bank of Afghanistan Quarterly Report, March 2008. EIU country report for Afghanistan, Nov 2008. 2

•

• • •

Agriculture continues to be the focus of development efforts and contributes  most to GDP. Unemployment and insecurity are the greatest threats to the  Afghan economy at present.    Real GDP is estimated to have fallen to 3% in 2008/09 compared to 12% in  2007/2008 primarily on account of a sharp contraction in agricultural output.  Third year (2009) of ongoing Poverty Reduction and Growth programme of  structural reforms with the IMF.  Opium output is falling but remains high. Electricity provision falls short in Kabul  and the energy situation is precarious.   National CPI rose by 50.6 percent in October 2008 driven by strong food price  increases.4 With falling global commodity prices, inflation dropped to 9 percent  in Feb 2009.  The trade deficit was unsustainably high at over 60 percent of GDP, and  increased by over 20 percent compared to March 2007.  Afghanistan’s total external debt was approximately US$ 12 billion. 

•   Government response5     • Food: Temporary removal of import tax on wheat & other staple food items;  Discussion on Strategic Grain Reserve (SGR) system; seeking ways to import food  through bilateral talks with countries.  • Aid: Afghanistan government and the U.N made a joint appeal for $203 million  worth of food aid and $176 million for agricultural recovery. Indian government  pledges 250,000 MT of wheat for Afghanistan.  • Social protection: New 5 year social protection system strategy as an integral  component of the Afghanistan National Development Strategy (ANDS, 2008‐ 2013) to be funded by donors.     

4 5

Source: Agricultural Price Bulletin: Ministry of Agriculture, Irrigation & Livestock, Afghanistan Source: WFP Rapid Assessment, June 2008. Afghanistan Conflict Monitor website.

BANGLADESH    Food and nutrition situation:6    Bangladesh’s food insecure population is now estimated to be 65.3 million people, a rise  of 7.5 million, mostly due to the impact of higher food prices. Similarly, the size of the  severely food insecure population has grown by an estimated 6.9 million; up from 27.9  million  to  a  present  level  of  34.7  million.  As  a  result,  45  percent  of  the  country’s  population of 145 million is now food insecure and nearly one‐quarter (23.9 percent) is  severely  food  insecure.  These  however  are  conservative  estimates;  the  Centre  for  Bangladesh Policy estimates there are 12.5 million ‘new’ food insecure as a result of the  food price crisis of 2007/2008 and the worsening global economic situation.    Factors responsible for the worsening poverty and food insecurity in Bangladesh  • These  include  natural  disasters  such  as  the  monsoon  floods  in  mid  2007  and  cyclone Sidr in late 2007; rising food prices and other commodities in 2007 and  in the first half of 2008; lack of access to land for cultivation; poor employment  opportunities,  markets  and  low  wage  rates;  almost  10  million  food  insecure  Bangladeshi’s are outside any food safety net coverage.  The rising cost of food  • Between June 2007 and June 2008, wholesale and retail prices of coarse rice, the  main  staple  in  Bangladesh,  had  increased  by  over  75  percent;  almost  80‐90  percent  of  household  expenditures  were  on  food  items  in  2008,  considerable  higher than the 70 percent level reported in the HIES 2005.  The most vulnerable:  • Low fixed‐income households and rural households experiencing crop failure are  the most vulnerable as are large families with 6 or more household members  Child under‐nutrition  • Bangladesh has one of the highest child malnutrition rates in South Asia with a  little fewer than 1 in 2 children being moderately or severely underweight.7  Food shortage  • Favorable  weather  and climatic  conditions  and  extra efforts  by  farmers  to  gain  from  the  price  increase  could  result  in  favorable  crop  prospects  for  the  latter  half of 2008/early 2009.  However, the estimated food shortage in Bangladesh is  still quite high – 1.45 million tons.  What families are doing to cope  • Coping strategies used by families to cope with increased food prices and food  insecurity  include:  limiting  portion  size  and  frequency  of  meal;  limiting  consumption by adults; eating at relatives; borrowing or consuming on credit.     6 7

Source: FAO/WFP Crop and food supply assessment mission to Bangladesh, 2008 (www.fao.org) SOWC, 2009, UNICEF.

Economic Situation8    • The  new  government  is  focusing  on  containing  consumer  price  inflation,  which  averaged  almost  9  percent  in  2008.  The  subsidy  on  fertilizers  is  expected  to  remain  while  the  Government  continues  to  liberalize  its  banking  sector.  An  expansionary fiscal policy is likely to continue through 2009 as the government  announces expanded safety nets ‐ particularly in relation to food insecurity and  poverty  ‐  and  a  ‘fiscal  stimulus’  package  that  will  subsidize  a  range  of  goods  including food and fuel.   • Worker remittances from abroad are expected to fall in 2009 as a result of low  oil prices and contraction in the Middle East.   • The rate of inflation, as measured by the average CPI change during the year is  expected  to  slow  to  6  percent  in  2009  from  9  percent  in  2008.  In  Feb  2009,  inflation  was  at  5.8%  (year‐on‐year).  However,  inflation  could  rise  faster  if  weather conditions disrupt crop supplies.   • Bangladesh Bank (BB) interventions have prevented volatility of the taka against  major currencies  • The external trade is expected to decline from $6.2 billion in 2008 to about $5.5  billion in 2009 and export growth could slow due to weakening global demand,  especially  in  the  US  and  Europe  which  account  for  50  percent  of  Bangladesh’s  export trade.   • Foreign  exchange  reserves  declined  steadily  from  $6  billion  in  June  2008  to  about $5 billion in November 2008 on account of global deleveraging.    Government response    • Food:  Reinstated  the  Trading  Corporation  of  Bangladesh;  Public  food  distribution system (PFDS); Open market sales; Strategic reserves; VGD  and  VGF  programmes;  Food  for  work  and  cash  for  work;  Fertilizer  subsidy  • Fuel: Subsidy on diesel  • Economic: Fiscal stimulus   

 

8

EIU Feb 2009 country report for Bangladesh (www.eiu.com)

 

INDIA    Food and nutrition situation9    With more than 230 million hungry, India has the highest number of food insecure  people in the world. More than 20 percent of India’s population suffers from chronic  food deprivation. Despite having the fifth largest economy in the world, India ranks 94  out of 120 countries for which the 2008 Global Hunger Index was calculated in 2008. A  little less than 30 percent of the world’s hungry live in India.    Under nutrition in India   •    One in every three working age adults (15 – 49 years) is considered thin.   • All 17 states for which IFPRI has calculated a hunger index10 (containing more  than 95 percent of India’s population) have a ‘serious’ hunger problem. For 12,  the situation is defined as ‘alarming’ with Madhya Pradesh possessing the worst  hunger crisis. Even states that are performing well in terms of GDP growth (like  Punjab and Andhra Pradesh) have ‘serious’ or ‘alarming’ food crisis levels.   • 60 percent of severely wasted children live in 6 states (Uttar Pradesh, Madhya  Pradesh, Bihar, Rajasthan, Maharashtra and Tamil Nadu). Hunger is increasing  substantially in states like Orissa, West Bengal, Madhya Pradesh, Karnataka and  Rajasthan.   The situation is worse for children and women.  • A little less than 40 percent of the global population of hungry children resides in  India. These figures are significantly higher than in sub‐Saharan Africa and much  higher than global averages.  • On average, 41 percent of children under 3 in India are underweight and 46  percent of all children under 5 are underweight. Malnutrition accounts for more  than 50 percent of child deaths.  • Some estimates suggest that 1.5 million children could become malnourished  due to the food price crisis of 2008.11 However, in light of rising levels of  unemployment and job losses, this number could be even higher.   • Rates of child malnutrition are disproportionately higher in poorer households  (2.6 times higher) and in children from socially excluded groups (50 percent  higher).  • More than 70 percent of children under 5 are anemic and this is increasing. As  many as 8 states are shown to have increasing anemia rates among women at  reproductive age with Andhra Pradesh and Haryana reporting more than 55  percent of women in the relevant age group as anemic. 80 percent of rural  households have no access to toilets.   9

Source: WFP/MSSRF Report on the state of food insecurity in rural India, 2008. Source: IFPRI, Indian State Hunger Index, 2008. 11 Source: WFP/MSSRF. Report on the state of food insecurity in rural India, 2008. 10

Other factors  • Although the year 2008 produced record food grain harvests of over 228 million  tons, it is estimated that in another 5/6 years, the food requirement would be  over 250 million tons,12 raising the possibility that unless substantial gains are  made in agricultural productivity, India could become a chronic importer of food  in the near future.   • Cheap rural credit and other agricultural inputs have been lacking. More than  150,000 farmer suicides have been recorded since 2000.  • Wholesale price inflation decreased from record highs in July 2008 from 13  percent to less than 7 percent by Jan 2009. Over the same period, food price  inflation rose from 5 percent to over 11 percent.   Coping Mechanisms13  • A recent survey14 recorded coping mechanisms used by families which include  reducing the quality and frequency of food intake, selling goods and property,  purchasing on credit and borrowing, migrating for food, reducing expenditure on  other items such as health and reducing children’s participation in education.    Economic Situation15    • India has not been decoupled from the global economic recession and the real  sector effects have been unforgiving and harsh: after years of growth higher  than 8‐9 percent real GDP growth is forecast to grow at about 4.4‐5 percent in  2009/2010; industrial growth has slowed down for the first time in fifteen years  with the growth in the index of industrial production dropping from a high of 9.2  percent in 2007 to under 3 percent in 2008/2009. Such rapid contraction in  industrial output growth will likely hurt the small scale manufacturing sector  most; private consumption has slumped from over 8 percent of GDP in  2007/2008 to just over 4 percent of GDP in 2009 owing to a fall in the growth of  real wages and rising unemployment in many sectors – particularly those  oriented towards exports.  • External and domestic financing for the corporate sector has shrunk putting  pressure on credit and money markets.   • Persisting current account deficits (significantly affected by the oil price hikes),  global withdrawal of portfolio investment funds and capital outflows, conversion  of rupees to dollars by Indian firms to meet foreign obligations caused a volatile  deprecation of the rupee against the US$ between Aug‐Nov 2008. The rupee fell  from Rs.40.37/$ in Nov 2007 to Rs.49/$ in October 2008. It fell again by March 

12

Source: Times of India, Feb 27, 2009. India tops world hunger chart. Source: Reserve Bank of India, WPI and CPI series. Feb 2009 update. 14 Source: Mothers’ views on the impact of the increase in food prices on their lives and the lives of their children: Evidence from a survey with 6000 mothers in India, 2008. UNICEF. 15 Source: EIU Feb 2009 country report. RBI Feb 2009 update. Economic Advisory Economic Council Report Jan 2009. 13

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2009 to Rs49.26/$. Official reserves fell from $309 billion in March 2008 to $239  billion in Jan 2009.  Exports dropped sharply by 20% in Jan 2009 and again by 19% in Feb 2009  reflecting a slowdown in global demand.  The Wholesale Price Index (WPI) decreased from record highs in July 2008 from  13 percent to less than 7 percent by Jan 2009. However compared to Feb 2008,  food prices rose from 5 percent to over 10 percent in Feb 2009.   The effects of the recession prompted both the RBI as well as the central  government to take aggressive measures to spur economic growth. On Jan 2,  2009 the RBI announced a series of measures to unclog credit and money  markets including slashing the repo rate to 5.5 percent (from over 9 percent in  Oct 2008  On Jan 2, 2009 the government also announced its second ‘fiscal stimulus’  package (the first one was estimated to cost $4 billion and implements an across  the board 4 percent reduction in the central vat tax) aimed at easing credit flows  and boosting economic growth.   Provisioning for public sector pay increases, National Rural Employment  Guarantee Act and various subsidies, especially for petroleum products and  food, has added to central government expenditures. The global recession has  prompted India, like many other countries, to move away from fiscal  consolidation in favor of boosting business confidence and the domestic growth  trajectory. Including off‐budget items, India’s deficit could be as high as 8‐9  percent of GDP. Including state deficits, the consolidated budget deficit could  rise over 10 percent of GDP. 

  Government response16    • Food: Strategic reserves of 31.6 million tons of food grain; Targeted public food  distribution system (PFDS); Export restrictions; Mid‐day Meal Scheme; Wheat  based nutrition programme; National Rural Employment Guarantee scheme; Food  and fertilizer subsidies (2 percent  of GDP in 2008); Integrated child development  system; Rural grain banks; 11th 5 Year plan nutrition security.  • Fuel: Fuel subsidy (Petrol, diesel and LPG)  • Economic: Fiscal stimulus packages 1; RBI monetary interventions   

16

Source: Food Corporation of India, Distribution of food grains, 2008 Economic Advisory Council – Economic report, Feb 2009.

NEPAL     Food & Nutrition Situation    According to the WFP, by July 2008, the number of people requiring food assistance or  experiencing food insecurity increased to 6.4 million.  33 of out 75 districts are  chronically food insecure.17 Given the continued pressure on food prices, almost the  entire population below the poverty line, approximately 8.5 million people as well as a  good number just above the margin could be considered food insecure.     Major causes for increased food insecurity include:  • Severe flooding and bandhs; unprecedented rises in food prices during 2008  affecting more than 85 percent of Nepalese households; decreased production  of maize and other local crops; heavy reliance on Indian imports; lack of market  access due to poor or non‐existent roads  Over 40 percent of Nepal’s population is undernourished18  • Almost 1 in 2 children is stunted (43%) or underweight (48%); Acute malnutrition  is approaching 20 percent in some areas; 33 out of 75 districts chronically food  insecure.  Poorest quintile spends more than 70 percent of their expenditure on food.  • 20‐30 percent increase in prices could mean a doubling of expenditure for the  very poor to maintain consumption; coping mechanisms used by households  include shifting to less preferred foods, depleting savings to purchase food,  increasing indebtedness or buying on credit and reducing non‐food expenditure.  Special vulnerable groups  • Poor & extreme poor; Dalit & other indigenous tribes; female‐headed  households, urban‐poor, landless and marginal farmers    Economic Situation    • GDP  growth  is  forecast  to  fall  to  3.6  percent  for  2008/2009  fiscal  year  and  recovery hinges on government improving law and order.  • Avian  influenza  has  reappeared  and  could  undermine  farm‐sector  activities  Power outages continue as demand exceeds supply.   • Nepal  Rashtra  Bank  (NRB)  attempted  to  tighten  monetary  policy  and  credit  in  September 2008 reflecting concerns about money supply and growth.  • Inflation rose for the 11th straight month in November to 14.5 percent driven by  the rapid rises in the prices of food & fuel. By Feb 2009 inflation was still at 14  percent reflecting unrelenting price pressures.  

17 18

Source: Irinnews.org Newsletter, October 8, 2008. Source: WFP/NDRI, Market and Price Impact assessment, July 2008.

•

Nepal’s balance of payments moved into a surplus of Rs11.9 billion. By the end  of  Jan  2009,  foreign  exchange  reserves  had  grown  to  $3.27  billion  reflecting  strong inflows from remittances and aid. 

  Government response19    • Food:  Restriction  of  food  grain  exports  from  Nepal;  Nepal  Food  Corporation  request for NRs100 million additional funds  • Fuel:  Price  of  fuel  dropped  marginally  from  NRS95/Litre  to  NRS90/Litre  in  November 2008 but still remains higher than 2007  • Agriculture: Improve agricultural productivity and enhanced biodiversity.  • Aid: Mobilizing food‐aid in vulnerable food districts.  • Social  protection:    Considering  introduction  of  ration  cards  (similar  to  India).  Promised targeted subsidy to excluded groups on kerosene & LPG   

19

Source: WFP & UNICEF Nepal documents.

                                                         

PAKISTAN    Food & Nutrition Situation20    More  than  50  percent  of  households  surveyed  in  June  2008  experienced  the  shock  of  higher food prices. It is estimated that the total number of people with inadequate food  consumption rose from 72 million in 2005/06 to 84 million by July 2008 (51 percent of  population).     • Rural households in Pakistan’s western provinces are worst affected.   • 1 in 3 households unable to afford medical assistance when sick.  • Adverse impact on schooling (movement from private to public).  • In absolute terms child nutrition is worsening. The number of stunted children is  in excess of 9 million and more than 4 million children are suffering from wasting   • Poorest quintile spends more than 70 percent of their expenditure on food.  • Food security situation remains precarious in Pakistan’s western provinces  • Special vulnerable groups: women headed households; rural households, urban‐ poor; border districts along North West and East    Economic situation21  .  • Industrial output fell by 5 percent in July‐August. The global recession has  created a severe liquidity crunch in Pakistan and real GDP growth is forecast to  be less than 1.5 percent for 2009.   • Inflation remains unacceptably high at 21 percent in January 2009 and will  remain high due to continued escalation in money supply, increases in utility  prices and a sharp deprecation of the Pakistan rupee.  • The Federal Board of Revenue is behind its target tax collection for the year  2008/2009 and the trade deficit increased to $2.1 billion in Jan 2009 from approx  $800 million in Dec 2008.   • Weak export growth in textiles, high oil prices and rapid import growth has  caused a worsening of the current account and the deficit rose to over 6 percent  of GDP in November 2008. Inflows of foreign remittances mitigate some of the  current account deficit.  • Gross foreign exchange reserves stood at US$ 8 billion at the end of October  2008, a drop of over 30 percent from March 2008.  • Government needs external financing to meet government liabilities and avoid a  balance of payments crisis. IMF bailout package of $7.6 billion negotiated  enabling other donors to resume lending. ADB has pledged almost $1.5 billion  20

Source: High Food Prices in Pakistan: Impact Assessment & way forward. UN Inter-Agency Assessment Mission. July 2008 21 Source: Central Bank of Pakistan website & EIU country report for Pakistan, Nov 2008.

for infrastructure while the World Bank agreed to provide $500 million for  poverty alleviation and intends to provide up to $2 billion in 2009/2010.    Government response22     • Food: Import 2.5 million mt of wheat; maintain 1 million mt of wheat as strategic  reserve; vigilance on informal wheat flow across borders; removal of import duty  on wheat; Imposition of minimum export price on rice; wider coverage of  subsidized wheat flour distribution  • Aid: Delegation being sent to USA to seek free wheat.  • Fuel: Removal of fuel subsidies in September  • Social protection: Introduced new measures like the Benazir Credit card aimed at  giving short term loans to small farmers for agriculture inputs and the Benazir  Card which provides cash subsidies to 523 million poor households.              

22

Source: High Food Prices in Pakistan: Impact assessment & the way forward. Inter agency assessment mission report, July 2008 & media reports. 23 Exact number not yet determined

 

SRI LANKA    Food and nutrition situation:24    15.2 percent of the population, or roughly 2.8 million individuals, live below the poverty  line. 50 percent of the population, or roughly 10 million, consume less than the  minimum daily dietary requirement; under‐nutrition in Sri Lanka is high despite Sri  Lanka’s basic health indicators, which are better than most countries with comparable  per capita incomes.    A poor rice harvest earlier this year, rising prices, and the enduring conflict has made it  difficult for many citizens to attain food security.   • The annual production of rice in 2007, the main staple of Sri Lankans, fell short of  domestic demand by 25 percent. By 2010 this shortfall is expected to grow to 30  percent necessitating imports and means of combating shortages in the future.  In 2007, Sri Lanka spent US $ 1 billion on food imports which is expected to soar  by 40 percent to US $ 1.4 billion for 2008.  Nearly a quarter of Sri Lankan children are underweight  • According to the DHS 200725, 22 percent of Sri Lankan children are underweight,  with  4  percent  classified  as  severely  underweight;  15  percent  of  children  are  wasted, with 3 percent severely wasted; 18 percent of children are stunted, with  4 percent severely stunted. These indicators rise with age of the child reaching a  maximum between 18‐23 months. Underweight is higher for boys than girls and  for estate children compared to those in urban or rural areas; A little fewer than  1 in 3 pregnant women suffer from anemia.  Inequality, conflict and under‐nutrition  • There is considerable geographic variation in inequality and nutrition within Sri  Lanka though the most severely affected are the Northern and Eastern conflict  regions along with the tea estate sector. In the conflict zones in the Northern  provinces more than 170,000 rely on food assistance alone; especially vulnerable  are the internally displaced, women headed households and people with  disabilities. By district, Nuwara Eliya, Baticoala, Trincomalee and Badulla have  the highest rates of child malnutrition.   Overweight,  another  sign  of  nutritional  deficiency,  is  emerging  as  a  growing  problem  especially in the upper income quintiles.     Economic Situation26   

24

Source: DHS 2007. HIES 2006/2007. (www.statistics.gov.lk) Does not cover the Northern provinces. Hence these estimates err on the low side. 26 Source: Central Bank of Sri Lanka Statistics (www.cbsl.gov.lk) 25

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The World Bank places Sri Lanka among the 28 countries most vulnerable to the  food, fuel and financial crises of 2008 due to its high import dependence.  Stabilizing the foreign‐exchange position is likely to remain the most important  policy concern during 2009 as the Sri Lanka Rupee is expected to depreciate by  10 percent during the fiscal year 2009/2010.   Money supply expansion decelerated to 10.3 in August 2008, compared to the  growth of 16.6 percent in December 2007 and 22.2 percent in August 2007.   Inflation is very high in Sri Lanka and expected to remain at around 9‐10 percent  during fiscal year 2009/2010 creating pressure on wages and further fueling  inflation in the years ahead.  According to preliminary data for 2007, Sri Lanka’s exports (mainly clothing, tea,  rubber, gems and jewelry) were $7.5 billion and imports (mainly oil, textiles,  food, and machinery) were $11.2 billion. Clothing accounts for about 45 percent  of exports with the USA as the largest export destination. The recession in the  USA is expected to severely affect the garment industry which contributes about  10 percent to GDP. Up to 40,000 jobs may be lost.  Fiscal  deficits  are  expected  to  rise  to  over  7  percent  of  GDP  due  to  increased  defense expenditures and less than expected revenue inflows.  The  government  has  announced  ‘fiscal  stimulus’  type  packages,  but  these  are  aimed more at restoring liquidity in its shrinking credit markets. 

  Government response    •    Food: Direct imports to meet demand shortfall. Advocating initiatives to achieve  regional food security through SAARC; in October 2008, Ministry of Health Care  and Nutrition unveils new National Nutrition Plan that proposes a multi‐sector  approach to nutrition and sets up a national nutrition surveillance system; on  15th December 2008, reduced price of milk powder   •    Fuel: On 15th December 2008, the Supreme Court acting on many petitions from  the public, orders government to work out a formula based pricing for  petrol/fuel.  •    Social assistance: Direct food assistance, poverty reduction programmes and     health based interventions (integrated maternal and child health). 

"Read Country Profiles at http://docs.google.com/View?id=dfhq4nhj_3gp6f8jhb"

KEY RESOURCES UNICEF www.UNICEF.org UNDP www.undp.org International Monetary Fund www.imf.org • Economic Crisis Starts to Hit World's Poorest Countries http://www.imf.org/external/pubs/ft/survey/so/2009/NEW030309A.htm • Global Leaders to Assess Response to World Recession http://www.imf.org/external/pubs/ft/survey/so/2009/NEW042009A.htm The World Bank www.worldbank.org Asian Development Bank www.adb.org ODI

Chatham House

• ODI/UNICEF framework linking financial crisis to children http://www.UNICEF.org.uk/publications/pdf/odi-presentation.pdf • The Feeding of the Nine Billion http://www.globaldashboard.org/2009/01/26/the-feeding-of-the-nine-billion/ Read country profile at www.

Front Page Photo: Marta Ramoneda/UNICEF/ROSA/Pakistan/2009

United Nations Children’s Fund Regional Office South Asia Lekhnath Marg, Lainchour, Kathmandu Nepal www.unicef.org/rosa